Key facts
- Bernstein warns that failure to pass the CLARITY Act before the Senate's August recess could cause a crypto selloff.
- The CLARITY Act, aiming to establish a U.S. digital asset regulatory framework, has seen its odds of passing this year drop to 31%.
- Concerns over ethics provisions related to President Trump's family crypto interests are reportedly hindering the bill's progress.
- Despite potential short-term volatility, Bernstein remains constructive, expecting a crypto market rebound in late Q3 and early Q4.
- The SEC and CFTC are expected to accelerate rulemaking under Project Crypto, even if the CLARITY Act does not pass.
Wall Street firm Bernstein has warned that a failure to pass the CLARITY Act before the U.S. Senate's August recess could trigger an immediate negative reaction across Bitcoin and the broader crypto market. The CLARITY Act, formally the Digital Asset Market Clarity Act, passed the U.S. House in July 2025 and has since seen its versions advanced by Senate committees. A merged 616-page text was released on July 22, 2026, establishing the first U.S. regulatory framework for digital assets by splitting jurisdiction between the SEC and CFTC, and addressing DeFi rules, stablecoin yield limits, and developer protections.
However, the Senate is scheduled to begin its month-long summer recess around August 7–8, 2026. Prediction market platform Polymarket now puts the odds of the bill passing this year at just 31%, down 9% in the past month. Approval odds have dropped as Democrats reportedly oppose the new bill version, with concerns that ethics provisions tied to President Trump and his family’s crypto interests could derail a final vote. Senate Majority Leader John Thune confirmed Monday that a procedural vote on the CLARITY Act remains on his pre-recess list, but the bill is still absent from the official Senate floor schedule.
Treasury Secretary Scott Bessent has publicly pressured lawmakers to act now, pushing back on criticism of a key provision protecting blockchain developers. Meanwhile, Senator Lummis confirmed a Senate floor vote, stressing that Democratic compromises have already been folded into the current text.
Bernstein analysts stated that a Senate failure to act would likely produce an "industry knee-jerk reaction," a sharp short-term selloff in Bitcoin and higher-risk altcoins. Despite this, the firm remains constructive, expecting the crypto market to bottom and start showing momentum towards late Q3 and early Q4. Even without the bill, Bernstein anticipates the SEC and CFTC will accelerate agency rulemaking under Project Crypto, a joint initiative launched in July 2025 to build a workable digital asset framework using existing authority. This includes clearer token taxonomy, DeFi and self-custody guidance, and an innovation exemption allowing new token issuances to avoid securities classification for a finite period.
Coinbase CEO Brian Armstrong framed the vote in stark terms, stating that the CLARITY Act would bolster consumer protection, law enforcement capabilities, and U.S. competitiveness in digital assets. Grayscale has also publicly called for an immediate Senate floor vote. Industry heavyweights including BlackRock, Fidelity, and Goldman Sachs, along with law-enforcement groups like the Fraternal Order of Police, have backed the legislation. Anthony Scaramucci predicted that Trump will ultimately endorse the bipartisan ethics compromise.